OneWorld.net (U.S.)

When leaders of the G8 economic powers meet in Scotland in early July 2005, the threat of global climate change is at the center of the agenda—thanks to the leadership of the summit’s host, British Prime Minister, Tony Blair. The challenge facing the summit is two-fold: 1) to bring the world’s climate-altering superpower—the United States—into the next round of climate commitments and 2) to usher in a transformation of the world energy system to prevent a climate catastrophe in the decades ahead.

To mobilize investments and innovation, addressing climate change must be seen as an economic opportunity. The premise that nearly sank the Kyoto Protocol—binding emissions limits that the U.S. refused to sign—is that climate change is primarily about emissions control. While carbon dioxide is “emitted” when fossil fuels are burned, this regulatory paradigm led climate negotiators into an “I win—you lose” framework plagued by delays, unrealistic commitments, and a prospective multi-billion dollar market in “hot air.”

The climate problem will not be solved piecemeal. The challenge is to create new energy systems that will not only protect the climate, but will be economically superior. Saving the climate should become a race for who dominates one of the fastest growing sectors of the 21st century economy. This may sound like a pipe dream to those still feeling bruised by recent climate wars, but burgeoning markets for energy efficient technologies—such as solar panels, wind turbines, and bio-fuels—show what can happen when strong national policies are enacted. Experience over the past decade shows clearly that government incentives are needed to spur the private sector to act. Reinforcing this point, 23 multinational companies issued a statement in June calling on the G8 leaders to take strong action on climate change.

The global market for renewable energy technologies topped $25 billion in 2004, and is already reducing greenhouse gas emissions in countries such as Germany and Spain. In many markets, wind and bio-energy are already less expensive than fossil fuels. The Bush Administration has recognized the need for new technology to address the climate problem, but has focused on long-term government R&D. The private sector has the needed technology and research capacity if markets justify it. The role of government is to help those markets work more efficiently, as examples in Europe have shown. Among the challenges facing policy makers is replacing antiquated subsidies for fossil fuels with targeted subsidies for new technologies, which would be scheduled to sunset as they become competitive. To make this work, a wide array of market impediments—from tariffs on bio-fuels to antiquated electric utility laws—will need to be reformed.

Climate negotiators will still need to translate the need for transformation in the energy system into a meaningful, binding international agreement. The next opportunity for progress comes at the G8 Summit. Five countries and one multinational coalition—the European Union—represent 60 percent of total greenhouse gas emissions and are central to progress. Of the six, the E.U., Japan, Russia, and the United States will be at the G8 Summit, and the other two—China and India, together with Brazil and South Africa—have been invited by Prime Minister Blair to participate for the first time.

Between them, these countries have the ability to put the global energy system on a new track and to drive the development of new technologies. Although a global agreement is ultimately needed, consensus among the G8 and its guests can provide the kind of leadership that will make broader progress possible.

Christopher Flavin President, Worldwatch Institute